Editor's note: An earlier version of this story incorrectly mentioned National Semiconductor
Some will stand in silence, while some just scratch their scalps at the curious ways of Mr. Market. That's when you swoop in, pick up the severely mispriced stocks of excellent businesses, and sit back for awesome long-term returns.
Microchip designer Linear Technology
Linear is 17% cheaper today because CEO Lothar Maier had the nerve to acknowledge that there's a financial crisis going on around us all. Maier said his company saw dwindling order volumes across all markets in early October, and estimated that sales will clock in some 10%-20% lower in the next quarter. So times are tough for semiconductor companies, just like everybody else.
And that's where the profit opportunity comes in. Linear has a rock-solid balance sheet with more than $1 billion in cash equivalents, and its operating profits can pay off the interest on its modest borrowings about 10 times over. The capital expenses of running Linear's manufacturing lines are small because you don't need bleeding-edge processes to make the analog chips that are Linear's bread and butter. And Maier noted that many of his expenses are variable, and the company is already cutting back where it makes sense.
So Linear may not be quite as insulated from economic trends as fabless chip slingers like Broadcom
The short-term sellers are running rampant here. Unless you think this market crisis is permanent, this looks like a great time to pick up some Linear stock. Feel free to scratch your scalp while making up your mind.
Fool contributor Anders Bylund owns shares in Taiwan Semiconductor, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.